CED

January 2014

Contents of this Issue

Navigation

Page 35 of 75

A Prevailing View
2014 Business Outlook Survey
Make More, Don't Spend More
Despite the convergence
of unprecedented
business challenges
in 2014, most dealers
see a foreshadowing of
modest growth.
BY KIM PHELAN
Taking their cues from their
customers, the AED dealers who
responded to CED's annual Business
Outlook Survey are overwhelmingly –
more than three to one– anticipating
total dealership revenues to be higher
in 2014 versus 2013.
What's puzzling, however, is why,
in almost the same breath, 41 percent
of these dealers are also indicating
no change to their new equipment
sales inventory investments for this
predicted year of growth. However,
a little more than a third say they
will increase that investment by 1-10
percent year over year, and close to 17
percent said they plan to spend less
on new machines for sale.
In other words, a small majority of
dealers expect to make more money
yet plan to spend less on new iron
inventory – so where do they expect
to make that revenue, and where are
they willing to spend? If you're thinking rental, bingo on both counts – just
under half expect rental revenue to
grow 1-10 percent, and another 22
percent think 2014 rental business
will grow more than 10 percent. The
responses for how dealers will invest
in their rental fleets correlates closely –
just under half say they'll increase the
spend 1-10 percent, and 17 percent
said they'll raise it more than 10
percent.
How dealers come at the business
of rental is not dramatically different
from last year but generally reflects a
gradual jump for factory-authorized
distributors toward the rent-to-rent
34 | www.cedmag.com | Construction Equipment Distribution | January 2014
bandwagon. This year, close to 40
percent say that rent-to-rent (RTR)
is their dominant methodology
compared to 46 percent last year. A
miniscule 12 percent do most rental as
rental-conversions, and 26 percent of
AED dealer respondents call it a 50-50
split between RTR and RPO.
Breakin' It Down
Even though a two-thirds majority of
dealers still say their best customers
are cautious about project backlogs
and will therefore lean toward rental
again, a lot more of this year's surveytakers say customers are optimistic
versus this time last year: In 2013's
outlook survey, only 11 percent
of dealers were seeing customer
(continued on page 38)